Judge Approves Owens Corning Plan

July 17, 2006 A federal judge on Monday approved Owens Corning’s plan for emerging from bankruptcy this fall, five years after seeking protection from creditors over health claims related to its asbestos products. Owens Corning sought Chapter 11 bankruptcy protection in 2000 in an effort to shield itself from claims for billions of dollars in damages linked to the asbestos products it made decades ago. Judge Judith K. Fitzgerald approved the company’s disclosure statement from the bench and said she will likely issue a written order Tuesday. At a hearing Monday, company lawyer Norman L. Pernick told Fitzgerald that most of the objections to the disclosure statement had been resolved. The judge rejected those that remained. After the judge’s formal approval of the disclosure statement, Owens Corning’s proposal will be sent within 17 days to creditors for a vote before a scheduled Sept. 18 confirmation hearing. The plan has an effective date of Oct. 30 and would allow Owens Corning to exit bankruptcy with a value of $5.86 billion. Existing equity would be wiped out and 131.4 million shares of new stock will be issued. As part of its plan, the Toledo, Ohio-based company will pay more than $5 billion to asbestos claimants and as much as $2.27 billion to holders of bank debt. The U.S. Supreme Court recently declined to hear an appeal of another plan that would have lumped together the company’s assets. Earlier reorganization proposals failed because of disputes between creditors. Under the original version of the plan, shareholders would have gotten nothing. Shareholders and some creditors had hoped there would be legislation to create a national trust to take over asbestos liabilities from companies such as Owens Corning. But a bill that would have set up a $140 million victims’ fund failed in the U.S. Senate in February. Supporters said they will revive it.